Saving and the aging population

It was noticeable throughout the recent Federal Election campaign that the government was trying to buy the seniors' vote.

Regrettably, it was also noticeable that when the media presented a negative image of the older population in terms of the cost to the nation of Welfare funding, with the implication that older people are a burden on society, no-one, least of all the government, tried to refute this concept or to present a positive image of our ageing population.

Despite departmental campaigns and rhetoric to the contrary, governments in Australia appear to see old age as a 'disability' to be dealt with by 'hand-outs' in the hope that it will stay out of both sight and mind … except when pensioners and retirees can be wooed via the pork barrel at election time.

The recent presentation at the opening of the Investor Taxation Specialists' new Canberra office by Gary Tilsley, Managing Director of BIS Shrapnell, highlighted the implications for the Australian economy by the ageing of the population.

Mr Tilsley said, in essence, that as the population aged there would be fewer people paying tax to support the increasing number of aged people in the population.

He indicated that this situation would be worsened by the continuing failure of government policies to address the savings crisis in Australia.

His call to government was for the removal of the 'unfair, unjust, illogical and irresponsible' tax surcharge on superannuation and a viable, cohesive and bipartisan savings policy.

This call to action is wholeheartedly endorsed by the Australian Pensioners' and Superannuants' League Qld Inc. The majority of older Australians would much prefer to be self-supporting in their later years and in their retirement.

However, most are prevented from doing so by imposts on superannuation, unconscionable bank fees and charges that eat into savings, the inflexibility of the superannuation system, the lack of government control of superannuation funds and investment services and the lack of accountability of businesses and corporations whose collapses impact on both employees and investors with disastrous social and economic results.

These problems, which are forcing ever-increasing numbers of people into dependency on the welfare system, are being compounded by government policies impacting on mature-age unemployed.

Not only is this group discriminated against when it comes to the job network, although the government denies this, but if they try to start a small business to generate a small amount of income until a job becomes available, Centrelink automatically excludes them from any welfare support.

In addition, it now appears that those mature-age unemployed who have received or who are entitled to any superannuation may be required to spend it all before they become eligible for welfare assistance.

How do these actions encourage either self-reliance or saving?

In its haste to support government policies, the Reserve Bank continues to cut interest rates to the benefit of big business and people who can afford to buy their own homes but to the detriment of many older people who rely on interest earned on meagre retirement savings to maintain the most basic of living standards.

The niggardly pension of just 25 per cent of average male weekly earnings, when fiddling of the dates and payments allows payment of the full 25 per cent, is barely a living wage that does not allow for a terrific quality of life.

Compounding this poor economic standard has been the impact of the GST on ALL pensioners, those on disability and single-parent pensions as well as those on the age pension, yet only aged pensioners over the age of 65 received any compensation for the impost and impact on living standards of this most iniquitous of taxes.

Disability pensioners and single-parent pensioners received no compensation at all while those on unemployment benefits were also overlooked.

With government policies pushing wages down through industrial policies that favour corporate downsizing and the elimination of full-time positions in favour of casual, part-time and short-term contract positions, there is little hope of any increase in savings levels in Australia in the foreseeable future.

Coupled with the rising prices of processed products both through the GST and corporate sleight of hand, there is emerging a significant increase in the 'new poor' as evidenced by reports emanating from the major welfare agencies on this subject.

With the return to power of the person referred to during the election campaign as the 'Evil Gnome', and with the 'economic clown prince' in charge of the economy for another three years, we can hardly expect any real concern to be demonstrated, or changes made, for the benefit of the little people.

Indeed the very opposite is the most likely scenario as revealed in a Government Ministerial Submission (Submission No. 8676) leaked during the election campaign period.

The document makes clear that the Coalition's post-election Expenditure Review Committee in February 2002 will be held:

"...in an environment where the objective will be significant funding cuts." (p2)

This submission relates specifically to new funding models for the Government's social security delivery agency, Centrelink, and clearly indicates that the Coalition's budget razor gang will be focussed on 'significant cuts' post election.

Labor has claimed that the Howard Government already has legislation on the backburner to cut pensions through harsh means testing arrangements that will impact on pensioners who give family financial assistance, and those who receive compensation payments for pain and suffering.

Prime Minister Howard has also reportedly raised the spectre of increasing the retirement age for the age pension.

He told the Press Club last August 'I think we do have to face the need as a community ... for people to remain in the workforce longer.' (Press Club Address, 1 August 2001).

This suggests he is contemplating a new lift in the age pension age.

By deferring people's retirements indefinitely he can justify taking the knife to pensions.

"I do believe very strongly that this is a neglected area of change," he added at the time.

Labor said during the election campaign that the Howard Government has been responsible for well over $5 billion in cuts to social welfare since 1996.

Given the Government's pork barrelling during the election campaign and the resultant drastic depletion of the budget surplus, there seems little likelihood of any policy initiatives to assist the elderly or to address the issue of the savings regime in Australia in a meaningful way.

With the so-called mutual obligation farce about to be extended to the unemployed up to 49 years of age (commencing next year), burgeoning unemployment amongst the young and the old, and the not-far-off introduction of 'mutual obligation' for those unemployed over 50 (due in 2003), there is also little prospect of there being anyone left earning sufficient wages to be able to save at all.

One has to wonder what our forefathers fought for in the last century.